(Adds details on pipeline, background)
By Elias Biryabarema
KAMPALA, Aug 10 (Reuters) - Kenya and Uganda have reached a
final decision on the route for a crude pipeline linking their
newly found oilfields to the Kenyan coast, an important step for
oil firms to make a final investment decision, the countries'
presidents said on Monday.
Oil executives have previously said they cannot make
progress with their final investment decision on developing
discoveries in Uganda and Kenya until the pipeline route and
related costs were clear.
Uganda has an estimated 6.5 billion barrels of crude
reserves in its fields in the country's west near the border
with the Democratic Republic of Congo while Kenya estimates its
recoverable reserves at about 1 billion barrels.
A statement issued after Kenyan President, Uhuru Kenyatta's
visit to his Ugandan counterpart, Yoweri Museveni, said: "The
two heads of state agreed on the use of the northern route, that
is Hoima - Lokichar - Lamu for the development of the crude oil
pipeline."
The statement said the implementation of the pipeline route
would be subject to Kenya guaranteeing the security on its side
of the pipeline, the financing of the project, and a transit fee
not higher than would be payable on any other alternative route.
"The presidents agreed ... implementation of the project
without further delay," the statement said.
Two possible routes had been proposed, with the second one
following the route of an existing products pipeline further
south running to the port of Mombasa.
Alongside the pipeline on the corridor of land in the north
of the country to Lamu, Kenya wants to build a new port to serve
the region.
It says work on Lamu port has begun, but experts say a spate
of militant attacks in the region that borders Somalia have
raised concerns about security of the pipeline along that route.
A fall in oil prices in the past year has knocked other oil
projects off the agenda, but analysts say the Kenyan and Ugandan
plans are unlikely to be shelved because they are relatively
easy and cheap to access compared with offshore finds.
Joseph Njoroge, Kenya's petroleum and energy ministry, said
in June that once a decision on the route was made, the
pipeline's construction could be completed by about 2018 or
2019.
A spokesman for Britain's Tullow Oil TLW.L , with stakes in
Uganda and Kenya, said in June Tullow expected to decide on
whether to proceed with investment in late 2016.
France's Total TOTF.PA and China's CNOOC 0883.HK are
also investing in Uganda, while Tullow's partner in Kenya is
Africa Oil AOI.TO .
(Addtional reporting by George Obulutsa in Nairobi, editing by
David Evans)